NEW YORK ( TheStreet) -- Apollo Commercial Real Estate Finance (NYSE: ARI) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and attractive valuation levels. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 17.6%. Since the same quarter one year prior, revenues rose by 31.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- APOLLO COMMERCIAL RE FIN INC has improved earnings per share by 48.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, APOLLO COMMERCIAL RE FIN INC increased its bottom line by earning $1.34 versus $0.86 in the prior year. This year, the market expects an improvement in earnings ($1.68 versus $1.34).
- The gross profit margin for APOLLO COMMERCIAL RE FIN INC is currently very high, coming in at 77.00%. Regardless of ARI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ARI's net profit margin of 63.00% significantly outperformed against the industry.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Real Estate Investment Trusts (REITs) industry average, but is greater than that of the S&P 500. The net income increased by 75.5% when compared to the same quarter one year prior, rising from $5.18 million to $9.09 million.
- After a year of stock price fluctuations, the net result is that ARI's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
-- Written by a member of TheStreet RatingsStaff